The fund files its complete schedule of portfolio holdings with the Securities and Exchange
Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on
Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at
www.sec.gov.
Coupon
Maturity
Date
Face
Amount
($000)
Market
Value •
($000)
U.S. Government and Agency Obligations (12.1%)
U.S. Government Securities (11.7%)
United States Treasury Note/Bond 0.625% 10/15/24 501,000 473,758
United States Treasury Note/Bond 4.500% 11/30/24 175,000 175,656
United States Treasury Note/Bond 1.000% 12/15/24 68,000 64,430
United States Treasury Note/Bond 4.250% 12/31/24 392,264 392,57
Why the difference in rates as the maturities are close ? DCA Purchased at different time, probably.
Face amount & Market value shown.
So the banks weren't the only ones getting whacked. Wonder if Wellington was holding any T's & notes, ETC..
Comments
For example, 10-yr T-Note issued almost 10 years ago would be nearing maturity now, but will show coupon from 10 years ago. Current price would reflect a change in rates.
As bonds get closer to maturity, their prices gradually converge to par. If the coupon is below current market rate based a bond's remaining maturity, a bond will be priced below par. If the coupon is above current market rate a bond will be priced above par. This is true regardless of when a bond was sold or why it was sold with a particular coupon rate.
The 0.625% bond is a discount bond. That coupon is so low, it's almost like a zero, that trades below par for its entire lifetime. You need to know Wellesley's acquisition price before you can say whether the fund has a mark-to-market loss or gain. All one can tell from the current price and coupon is the YTM.
The march toward par is not linear. A disproportionate amount of price gain of a discount bond comes early. If a 10 year bond is sold at a discount, then five years later the bond price will have gone up more than half (assuming no change in market rates). That's because it is now a 5 year bond and 5 year bonds yield less than 10 year bonds (usually).
So one can pick up some yield by continually selling bonds and buying longer term bonds rather than holding bonds to maturity. This strategy is often called "rolling down the yield curve".
https://corporatefinanceinstitute.com/resources/fixed-income/rolling-down-the-yield-curve/
The 0.625% bond
Thanks for your time, Derf
The 4.25% bonds are currently priced slightly above par. So their market price will gradually decline toward par. But the coupon payments until maturity will more than make up for the slight decline in price.
The "face value" or "principal" is what a bond pays at maturity. If these were physical paper bonds, this amount would be printed on their face. Hence the term face value.
I believe that what you are looking at is the fund's latest semi-annual report, Form N-CSRS.
https://www.sec.gov/Archives/edgar/data/105544/000110465923065152/tm239404d2_ncsrs.htm
N-PORT forms are much less readable. Here's the fund's latest one.
Neither reports the purchase price - just current and maturity values.
Fidelity shows a current asking price of $94.280, i.e. 94.28% of face value. The semi-annual (March 31) report valued the bonds at 473,758/501,000 or 94.56% of face value. This decline is due to market interest rates rising. Offsetting that decline, but only partially, was the bond's gradual appreciation, heading toward face value at maturity.
If you have a login at Fidelity, you can see the quote here.